The key to Lego's success? Staying inside the box

Nicole Goodkind

Nicole Goodkind

Daily TickerFebruary 20, 2014

The Lego Movie has proven itself to be a U.S. box office darling. The animated feature has been sitting pretty in the No. 1 spot for two weeks, raking in $143.8 million so far and receiving a rating of 96% on Rotten Tomatoes.

Lego itself is a company at the top of its game. 2012 was the best year the company had seen in its 82-year history, with a net income rising 35% to almost $1 billion. Over the past five years the company has grown sales at 24% per year and profits at 40% per year. Lego is the world’s most valuable toy company and it doesn’t even have patent protection.

Only 10 years ago, however, Lego was facing an entirely different reality. The company was hemorrhaging nearly half a million dollars in value daily. The toy company couldn’t compete with the new games of the digital age and found itself overextending its resources by trying to keep up and “think outside of the box.”

Enter Jorgen Vig Knudstorp, a young consultant (now CEO of the Lego Group), who developed a set of guiding cultural principles that allowed Lego to innovate on its own terms instead of trying to keep up with other companies.

“Lego went on this period of experimentation between 1999 and 2002 where they kind of left behind the brick and challenged their designers to come out with great new creative play experiences, to think outside the box,” says David Robertson, professor of Innovation at the Wharton School and author of Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry. “What happened is that thinking outside of the box almost put them outside of business. What they discovered is that playing with virtual Legos doesn’t make kids want fewer bricks, it makes them want more bricks..that there was nothing disruptive going on.”

Lego stands on top of the box, according to Robertson. “And now there’s 12 different Lego sets tied to the movie that kids are going to find irresistible and are going to become relentless in asking their parents for.”

According to Robertson the best takeaway from the Lego success story is to stick to what you’re good at and innovate from there.